News & Updates

February 22, 2019

Alliance for Site Neutral Payment Reform Urges Congress to Consider Site Neutral Payment Reforms

In a letter to Congressional leaders, Alliance detailed how site neutral payment reforms can save U.S. taxpayers billions of dollars while increasing access to care in community-based settings

WASHINGTON—The Alliance for Site Neutral Payment Reform submitted letters to Congressional leadersurging them to consider site neutral payment reforms to achieve significant health care savings that directly and positively impact beneficiaries, the Medicare program, employers and American taxpayers, as well as enhance transparency for patients.

The letters, sent to Senateand Houseleaders on February 20, described the nation’s critical need to adopt site neutral payment reforms in order to save taxpayers billions of dollars in healthcare costs, while increasing access to care in community-based settings. 

“Site neutral payment reforms have long had bipartisan support from policymakers, healthcare economists, regulators and MedPAC,” the Alliance noted in the letter. “In terms of savings, a recent projection from the Congressional Budget Office suggests site neutral payments for outpatient services have the potential to save $13.9 billion over 10 years.”

Current policies that allow certain hospital outpatient departments (HOPDs) to charge significantly higher rates than physician offices or other healthcare settings for performing the exact same services have resulted in increased costs to patients, employers and taxpayers. According to a November 2017 report by Avalere, Medicare paid an additional $2.7 billion on services and patients spent $411 million more in out-of-pocket costs when certain services were delivered in a hospital-owned setting.[1]

In addition to increasing the costs of care throughout the U.S. healthcare system, payment disparities between HOPDs and community-based settings encourage hospitals to absorb physician practices in order to exploit higher reimbursement rates, accelerating a process called vertical integration. In turn, vertical integration further restricts patient access to care in the lower cost community setting.  According to a study published in the Journal of Health Economics, prices for physician services provided by hospital-acquired doctors increases by 14 percent after an acquisition.

[2]Furthermore, integrated facilities have been shown to be more likely to refer patients to the owning hospital, fueling higher prices and begetting even more integration.[3]In fact, between July 2015 to July 2016 alone, 5,000 physician practices were acquired by hospitals.

The Alliance looks forward working with Congress to improve health care for all Americans and protect access to quality, cost effective community-based care.


About the Alliance for Site Neutral Payment Reform

The Alliance for Site Neutral Payment Reform is a coalition of patient advocates, providers, payers and employers who support payment parity across site of service in order to decrease Medicare and commercial spending, ensure patients receive the right care in the right setting, lower taxpayer and beneficiary costs and increase patient access. Our growing membership represents healthcare providers, patient and consumer groups, insurers and others who believe patients – and the healthcare system – would be better served by policies that are fiscally wise and preserve and enhance care options. Learn more at

[1]Avalere, PAI: Implications of Hospital Employment of Physicians on Medicare & Beneficiaries, November 2017.

[2]“The effect of hospital acquisitions of physician practices on prices and spending,” Journal of Health Economics, May 2018

[3]“The Effect of Hospital/Physician Integration on Hospital Choice,” Journal of Health Economics, December 2016

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